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What Warren said about climate change

Fri, 13th July 2007 - 15:45

Even the most celebrated assessors of risk, their fortunes staked on the issue, can't agree about climate change.

Warren Buffett, ceo of Berkshire Hathaway, and often hailed as the World's smartest investor*1:
Buffett: I believe the odds are good that global warming is serious. There’s enough evidence that it would be foolish to say there’s a 99% chance it isn’t a problem. In this case, you have to build the ark before the rains come. If you have to make a mistake, err on the side of the planet. Build a margin of safety to take care of the only planet we have.
Mr Buffett's interest is more than academic. Business is scrabbling around trying to assess the impacts of climate change, none more so than insurance companies like those Berkshire Hathaway owns:
Gen Re writes way less business subject to the effects of global warming than does National Indemnity, which writes super-cat policies. We think much more about whether global warming will produce atmospheric changes that will change the frequency and intensity of major storms. We think the exposure goes up every year, even though we don’t know exactly what goes on in the atmosphere.

The relationship is explosive – global warming could increase expected losses by two, three, four or five times...
Curiously, his partner Charlie Munger is more sanguine:
Carbon dioxide is what plants eat. Generally speaking, it would be more comfortable if the world were a little warmer. It’s not as if a vast flood of people are moving to South Dakota from southern California. [Laughter] It’s not clear that it would be a disaster for all humans, but the dislocations would be hard.
Buffett:
You don’t think it would be a problem is the sea level were 15-20 feet higher?
Munger:
With enough time, these things can be adjusted to. I don’t think this is likely to be an utter calamity for mankind. You’d have to be a pot-smoking journalism student to think so.Footnotes:

In another memorable quote from the meeting, Warren Buffett also criticised newspapers, businesses he once favoured: "Let’s suppose Mr. Gutenberg [Johannes Gutenberg was the inventor of modern printing] in the 1500s [actually 1400s; he lived 1400-1468] had become a day trader or hedge fund manager instead, so that we never had printing. But along came the Internet and cable TV. Now imagine that someone came along saying, “I have a great idea: let’s chop trees down, buy expensive printing presses and buy a fleet of delivery trucks, all to get pieces of paper to people to read about what happened yesterday.” I don’t think we’d be backing him."